lng potential for the great lakes region. jon williams...overview natural gas 101 why natural gas as...
TRANSCRIPT
LNG Potential for the Great Lakes
Region
May 21, 2014
Jon Williams
CenterPoint Energy
Overview
Natural gas 101
Why Natural Gas as a Vehicle/Equipment Fuel?
LNG Facts and Safety
CenterPoint Energy LNG Plant and LNG Market Experiences
Potential LNG Uses By Market Segment/Industry Type
CenterPoint Energy CNG & LNG Availability in Minnesota
Questions
2 CenterPoint Energy Proprietary and Confidential Information
Natural Gas 101: How natural gas gets to users
CenterPoint Energy Proprietary and Confidential Information 3
Why Natural Gas as a Vehicle/Equipment Fuel? Natural gas is:
Abundant Affordable American Clean Proven/Safe
Estimated natural
gas reserves
provide over 100
more years of
supply
Take control of
your fleet costs.
The more you
drive the more
you save with
average savings
of $1.50 per
gallon, payback in
2-4 years
U.S. Imports
about 50% of oil
consumption,
while 98% of
natural gas
consumption is
produced in North
America (87% in
U.S.)
Converting one
refuse truck from
diesel to natural
gas = removing
300 vehicles off
the road
Millions of
vehicles
worldwide use
this technology-
140,000+ in U.S.
It just makes “cents”!!
CenterPoint Energy Proprietary and Confidential Information 4
LNG
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LNG Facts
113 active LNG facilities in the U.S.
Are over 200 peak shaving and LNG storage facilities worldwide including in the U.S.
Converting natural gas to a liquid reduces its volume by about 600 to 1
LNG will stay at near constant temperature if kept at constant pressure (auto refrigeration)
As long as the steam (LNG boil off vapor) is allowed to leave the tea kettle (tank), the temperature will remain constant
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General LNG Safety
LNG has been safely and securely used around the world for decades.
Onshore LNG facilities are industrial sites and are subject to all rules, regulations and environmental standards imposed by the various jurisdictions.
Safe, secure LNG operations involve multiple layers of protection to prevent specific hazards from occurring.
All facilities constructed in the United States that handle LNG have built-in systems to contain LNG, prevent vapor releases, and prevent fires.
Explosion is unlikely to occur with LNG activity.
Environmentally, there is little smoke associated with an LNG fire and is no need for clean up of LNG spills on water or land.
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General LNG Safety
LNG vapor, mainly methane (natural gas), burns only within the narrow range of a 5 to 15 percent gas-to-air mixture.
If the fuel concentration is lower than 5 percent, it cannot burn because of insufficient fuel.
If the fuel concentration is higher than 15 percent, it cannot burn because there is insufficient oxygen.
For LNG to burn, it must be released, vaporize, mix with air in the flammable ratio, and be exposed to an ignition source.
Other fuels (I.e. jet fuel or propane (LPG)) ignite at much lower concentrations in air and have much lower auto-ignition temperatures than LNG.
LNG vapors dissipate more easily which means potential hazards can persist longer for other fuels than for LNG.
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CenterPoint Energy LNG Experiences
9 CenterPoint Energy Proprietary and Confidential Information
CenterPoint Energy LNG Market Experiences
Plant Information
Location: Burnsville, Minnesota
Built in the middle to late 1970’s
12 million gallons (1 BCF) storage capacity (a giant thermos)
Six feet of insulation between the inner and outer walls
147 ft. in diameter and 150 ft. high
Liquefaction capability of 5,000 Dth/Day, (60,000 gallons/day)
Vaporization capability of 3,000 Dth/Hr, 72,000 Dth/day
Plant’s full daily vaporization capacity is required in the Minnesota gas supply portfolio to meet the demand requirements of CenterPoint Energy’s firm customers.
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CenterPoint Energy LNG Market Experiences
Plant Information-Continued
Safeguards include:
Hazardous gas and UV detectors
Integrated alarm system monitors operations 24/7
Staffed around the clock by highly trained employees
Video cameras and fence detection equipment monitor the grounds.
Contains bulk tanker loading facilities
Improvements to pumps, winter supply capabilities
Installation of an on-site truck weight scale by approximately 6/30/14
Successfully co-exists with wetlands, Minnesota River Valley, businesses & wildlife (i.e. deer, wild turkeys)
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CenterPoint Energy LNG Market Experiences
CenterPoint Energy Approach to LNG Sales
Fuel provider only
Title to LNG transfers when loaded into the purchaser’s tanker
Purchaser responsible for transportation of the purchased LNG
Excess capacity is available to support LNG sales to interested purchasers
Two contract types (minimum volumes & discretionary)
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CenterPoint Energy LNG Market Experiences
History
Have sold LNG for approximately 15+ years
Markets served o Other utilities o Asphalt o Retail o Grain/crop drying o Trucking
Potential additional markets
Mining
Additional industrial applications
Railroads
Remote power generation
Oil/gas drilling operations
Marine/shipping
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CenterPoint Energy LNG Market Experiences
What is important to LNG purchasers?
Competitive pricing
Reliability of supply
Methane composition to maintain engine warranties, processes, etc.
Customer service oOverall flexibility (i.e. load pick-up hours, pricing
impacts) oPrompt notice of changing conditions to allow for
planning oWeather impact on plant operations oScheduled and unscheduled plant maintenance
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CenterPoint Energy LNG Market Experiences
What is important to a utility owned LNG Peak Shaving Plant?
Ability to meet customer requirements and needs
Ability and flexibility to meet operational and maintenance needs
Purchaser’s and/or trucking company’s personnel trained in handling and hauling LNG and compliance with industry codes/plant policies
Important Process Components
Non-Disclosure and Confidentiality Agreements (NDA’s)
Contracts (i.e. Insurance)
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CenterPoint Energy LNG Market Experiences
Drivers of LNG Sales
Economic advantages, savings, paybacks
Other fuel prices (i.e. Diesel, Propane, Waste Oil) oWinter of 2013/14 end-user experience with propane
supply/prices has increased the interest of potential users in both pipeline and LNG natural gas.
Emissions concerns
Proximity to (or lack of) a natural gas pipeline
Distance from the CenterPoint Energy LNG Plant (150 – 350 miles)
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CenterPoint Energy LNG Market Experiences
When Does the Use of LNG Make Sense?
Access to a nearby natural gas pipeline is not cost effective/practical
Natural gas supply reliability is greater than other fuels
You have a predictable and steady rate of use within LNG’s shelf life based on the fuel/storage tank it is stored in
Seasonal use where all acquired LNG is used by the end of the season or there is another available use for the LNG
Replacement of a fuel with a high incremental cost difference (i.e. diesel)
Well suited for high-fuel-consumption vehicles/equipment
Sufficiently developed LNG supply network is available
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CenterPoint Energy LNG Market Experiences
When Does the Use of LNG Make Sense?-Continued
Replacement of a fuel with a low equivalent energy units conversion factor. A higher conversion factor decreases cost savings. Examples:
Propane = 91,600 Btu’s/gallon divided by LNG’s 82,644 Btu’s/gallon = 1.1
Gasoline = 125,000 Btu’s/gallon divided by LNG’s Btu’s/gallon = 1.5
Diesel fuel = 139,000 Btu’s/gallon divided by LNG’s Btu’s/gallon = 1.68
Point of end use is within approximately 150 to 350 miles of the LNG plant.
Emissions are a concern (i.e. non-attainment areas).
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CenterPoint Energy LNG Market Experiences
When Doesn’t the Use of LNG Make Sense?
Pipeline natural gas (CNG) is a better option for return to base fleets and other applications.
There is not a predictable and steady rate of use (i.e. back-up fuel use only).
The distance from the plant to the point of end-use is excessive.
The incremental cost difference between fuels is not significant enough to:
Cover transportation costs.
Provide a sufficient payback of the required equipment.
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CenterPoint Energy LNG Market Experiences
When Doesn’t the Use of LNG Make Sense?-Continued
The cost of the fuel you are replacing spikes from time to time but is otherwise relatively stable and the cost difference is small.
The equivalent units conversion factor is too high and negates the incremental cost difference of the two fuels.
Emissions is not a motivating factor.
Geographic excise tax rates can impact cost savings.
Sufficiently developed LNG supply network is not available.
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Potential LNG Uses
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Annual Fuel Demand By Sector
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Source: LNGAmerica
Natural Gas Vehicle Use = Opportunity
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Potential LNG Uses By Market Segment or Industry
On-road Vehicles
Use LNG to replace diesel to power long-haul vehicles .
Maritime
MARPOL (Marine Pollution) emission control regulations are forcing the marine industry towards clean burning fuels. Limits on SOx and NOx from ships’ exhaust.
Oil & Gas Drill Rigs, Frac Spreads, Gen Sets
The payback on switching to LNG can be measured in months for a typical drilling site consuming approximately 700 to 2,500 gallons of diesel per day.
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Potential LNG Uses-Continued Off-road Vehicle Examples
Heavy Duty/Off-road
Off-road vehicles can obtain significant economic savings and environmental benefits when fueled with LNG rather than Diesel. High diesel consumption converted to LNG can provide paybacks in months if not years.
Locomotives
With the US rail industry consuming over 4 billion gallons of diesel each year the economics of LNG is driving rail companies renewed interest.
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CenterPoint Energy Proprietary and Confidential Information
Example: Long-term Diesel and LNG Fuel Price Comparisons
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Potential LNG Uses By Market Segment or Industry
Industrial Applications
Grain drying
Poultry barn heating
Mobile/temporary asphalt plants
Other industrial boilers
Remote power generation
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CenterPoint Energy LNG Availability in Minnesota
LNG Tanker Loads
11500 12th Avenue South
Burnsville, MN 55337
If you are interested in purchasing LNG, please contact
Jon Williams, 612-321-4390, Jen Stokes 612-321-4317 or
612-321-4330.
CenterPoint Energy Proprietary and Confidential Information 28
Questions?